Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 12 percentmarginal tax rate. Both companies perform engineering services. Company G is negotiating a contract to provide services for aclient. Upon satisfactory completion of the services, the client will pay $90,000 cash.a. Compute the after-tax cash from the contract assuming that Company G is the party to the contract and provides the servicesto the client.b. Compute the after-tax cash from the contract assuming that Company J is the party to the contract and provides the servicesto the client.c. Compute the after-tax cash from the contract assuming that Company J is the party to the contract, but Company G actuallyprovides the services to the client.Complete this question by entering your answers in the tabs below.Required A Required BRequired CCompute the after-tax cash from the contract assuming that Company G is the party to the contract and provides the servicesto the client.After-tax cash

After-Tax Cash CalculationsScenario A: Company G performs the contractGross Revenue: $90,000Taxable…

Answered: Company G, which has a 30 percent…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Riker receives $45,000 from Troy as payment for a vehicle that has a fair value of $56,500. The $45,000 constitutes full payment for the vehicle as specified in the sales contract. Assume that the time value of money is viewed as significant for this contract. Required: (a) Did Troy pay Riker before or after delivery of the vehicle? (b) Prepare the journal entry Riker would make to record receipt of Troy’s payment, assuming no interest revenue or interest expense had been recorded previously. (c) Prepare the journal entry Riker would make to record delivery of the vehicle, assuming no interest revenue or interest expense had been recorded previously.
Finley Company is looking for a new office location and sees a building with a fair value of $740,000. Finley also notices that much of the equipment in the existing building would be useful to its own operations. Finley estimates the fair value of the equipment to be $114,000. Finley offers to buy both the building and the equipment for $790,000, and the offer is accepted. Determine the amounts Finley should record in the separate accounts for building and equipment. (Do not round intermediate calculations.)
According to the ideas behind the revenue recognition standard of the FASB, when a seller enters into a contract with a buyer, the seller accepts certain performance obligations in exchange for the promise of receiving assets from the buyer. Under this standard, when does the seller RECOGNIZE REVENUE? When the seller enters into a contract with the buyer When the seller satisfies a performance obligation to the buyer When the seller spends 50 percent or more of the cash needed to serve the buyer When the seller collects cash from the buyer
Jorg is building an office building for Wilmington Company for $20,000,000. The contract has the following characteristics: • The office building is built to the customer’s specifications and the customer can make changes to these specifications over the contract term. • Progress payments are made by the customer throughout construction. • The customer can cancel the contract at any time (with a termination penalty); any work in process is the property of the customer. Jorg provides you with the following details: December 31 2019 2020 2021 Costs incurred to date $8,000,000 $16,000,000 $18,000,000 Estimated costs to complete 6,000,000 3,000,000 — Billings to date 8,000,000 16,000,000 20,000,000 Collections to date 6,000,000 12,000,000 18,000,000 Required: 1. Calculate the estimated total gross profit on the contract as of December 31, 2019, 2020, and 2021. 2. Calculate the percentage of completion for 2019, 2020, and 2021. 3.…
Riker receives $43,000 from Troy as payment for a vehicle that has a fair value of $54,300. The $43,000 constitutes full payment for the vehicle as specified in the sales contract. Assume that the time value of money is viewed as significant for this contract. Required: (a) Did Troy pay Riker before or after delivery of the vehicle? (b) Prepare the journal entry Riker would make to record receipt of Troy’s payment, assuming no interest revenue or interest expense had been recorded previously. (c) Prepare the journal entry Riker would make to record delivery of the vehicle, assuming no interest revenue or interest expense had been recorded previously.
Your answer is partially correct. During 2023, Darwin Corporation started a construction job with a contract price of $4.20 million. Darwin ran into severe technical difficulties during construction but managed to complete the job in 2025. The contract is non-cancellable. Under the terms of the contract, Darwin sends billings as revenues are earned. Billings are non-refundable. The following information is available: Costs incurred to date 2023 Estimated costs to complete 3,150,000 Gross profit/(loss) 2024 $600,000 $2,100,000 $4,100,000 2023 2,100,000 2025 Calculate the amount of gross profit or loss that should be recognized each year under the zero-profit method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter O for amounts.) 72000 $ -0- 2024 -72000 2025 100000
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Infotech Bhd enters a contract on 1 January 2019 to produce software for a customer for RM7,000,000. Infotech Bhd receives RM2,000,000 from the customer upon contract signing and the balance at the completion of the contract. According to the contract, the customer controls the system during the creation of the program. Infotech Bhd estimates that it will take two years to complete the project and uses the number of labor hours to estimate the rate of completion. Infotech spends 40,000 hours in the first year of the contract and another 10,000 hours the second year Prepare the entries recorded by Infotech over the life of this contract. Assume that all payments are complete by the end of 2020
Zentric Garage Inc. enters into a contract to provide services totaling $78,000. The contract includes a potential performance bonus based on when Zentric Garage completes the services. Zentric Garage estimates the following scenarios for completion. (Click the icon to view the scenarios.) Determine the bonus using the most-likely-amount approach. Determine the bonus using the most-likely-amount approach under scenario 1. The bonus for this contract using the most-likely-amount approach under scenario 1 is $ Determine the bonus using the most-likely-amount approach under scenario 2. The bonus for this contract using the most-likely-amount approach under scenario 2 is $ Determine the bonus using the most-likely-amount approach under scenario 3. The bonus for this contract using the most-likely-amount approach under scenario 3 is $ Ente Scenarios Complete within 3 days 5 days 8 days Probability Bonus Scenario 1 Scenario 2 80% 47% 15% 38% 5% 15% $ 13,000 $ 8,000 $ 3,500 Print Done…
Pearl Inc. sells storage structures of various sizes to homeowners and businesses.Respond to the requirements related to the following independent revenue arrangements for Pearl products and services. Pearl offers building R400, mainly to homeowners. Pearl will also install the building for the customer. The price for Pearl to deliver and install an R400 is $ 5,500. On a standalone basis, the building sells for $ 5,300 (cost $ 3,400), and Pearl estimates that the standalone selling price of the installation service (based on cost-plus estimation) is $ 500. (The selling of the building and the installation services are considered two performance obligations.) Pearl signed 15 contracts to deliver and install R400s on April 5, 2017. Customers paid the contract price in cash. The buildings were delivered and installed during May 2017. Prepare journal entries for Pearl for R400 in April and May 2017. (Round intermediate calculations to 6 decimal places, e.g. 1.246871 and final answers to…

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